Kim Jong Un’s Art of The Deal – Make Friends for Spare Parts

On a shelf in a cramped office on the outskirts of Moscow, businessman Igor Michurin has a framed photograph of himself shaking hands with one of his important customers – a North Korean embassy official whom Michurin calls Lee

It’s a relationship which offers unusual insights into the negotiating techniques of Pyongyang officials, and the ways North Korea has gone about commerce in the face of international economic sanctions – from trading in spare parts or wine and cigarettes, to offering labour for hire.

The Russian, whose two companies had revenue of nearly 42 million roubles (£499,698) according to 2016 records, was blacklisted a year ago by the U.S. Treasury Department because he often did business with a North Korean company that, according to the United Nations Security Council, helped Pyongyang’s weapons programme.

Michurin does not deny doing business with North Korea, but says he believes he did not break any laws.

North Korean leader Kim Jong Un meets with South Korean President Moon Jae-in (not pictured) during their summit at the truce village of Panmunjom, North Korea, in this handout picture released by North Korea’s Korean Central News Agency (KCNA) on May 27, 2018. KCNA/via REUTERS

The story is rooted in an old alliance. North Korea was founded by the Soviet Union, which supplied much of its original defence equipment. In the years since Pyongyang’s nuclear weapons tests sparked sanctions, Moscow often resisted the measures. U.S. President Donald Trump said in January that Russia was helping North Korea evade sanctions; Moscow says it is now actively cracking down on potential violations.

Around 2011, when Michurin got involved with Lee, U.N. monitors saw how Pyongyang would adapt bits and pieces of old, off-the-shelf, civilian equipment, and obsolete or unwanted parts to use in missiles. These parts reached North Korea from all over the world, including from past Soviet allies.

That’s the kind of item Michurin started out selling to the North Koreans.

A general view shows the cottage estate “Orlov” near Moscow, Russia February 27, 2018. Picture taken February 27, 2018. REUTERS/Tatyana Makeyeva

One of his companies, Ardis-Bearings, specialises in trading ball bearings – the steel balls that fit between the moving parts of a machine to help it run smoothly. Bearings can be used for military and civilian purposes, so are known as a “dual-use” technology. U.N. member states are expressly forbidden from exporting certain types to North Korea.

Those were not the types Michurin sold Lee, he said. Instead, he provided “regular mass-produced stuff, surplus stock, old bearings.”

Michurin said the Russian foreign ministry had questioned him last year about his sales to North Korea, and at the time ministry officials had told him they were responding to a message from the United States. Neither the foreign ministry nor the U.S. Treasury Department answered questions for this story.

“A SPARK”

Tall, with grey hair, and casually dressed in jeans, Michurin is a 39-year-old native of Belarus who set up his own business seven years ago after working in small Moscow firms in the industrial bearings trade. He quickly found interest from Asian customers.

“As soon as I place an ad on the internet to say I have some bearings for sale, some Asians will always turn up,” he said in the office in Moscow South where he ran the business until earlier this year. “They’re always buying different bearings, they apparently have a demand for them.”

A general view shows a building, which houses an office of Augur RosAeroSystems firm in Moscow, Russia February 13, 2018. Picture taken February 13, 2018. REUTERS/Maxim Shemetov

At the end of 2011, soon after the funeral of Kim Jong Un’s father, Kim Jong Il, Michurin said Lee invited him to the North Korean embassy. They walked together up a red carpet towards a portrait of the deceased leader, where they offered flowers.

“A spark ignited between us,” Michurin said. He returned several times, attending concerts of national songs and dances, eating in a North Korean restaurant in the embassy compound, and negotiating in embassy meeting rooms.

“We treated each other as friends,” Michurin said. “He was here in Moscow with his family, his wife and his child, we used to meet up, we spent time socialising as families.”

In 2013, Lee persuaded Michurin to make a $1,000 contribution to a North Korean charitable fund: the Kim Il Sung-Kim Jong Il Foundation. The foundation’s website is not available in Russia, but a video on YouTube says it was set up after Kim Jong Il’s death, preserves the Kumsusan Palace of the Sun and raises money for “education, public health and environmental protection.”

In return, Michurin got a certificate. “Great president Kim Il Sung and great leader Kim Jong Il will remain forever in the hearts of humankind,” it said, alongside portraits of the leaders

Lee’s business with the Russian was small. He would arrange for someone to collect a few dozen bearings at a time – the most the North Koreans ever paid was 100,000 roubles ($1,500).

Michurin said he sold the items as an ‘individual entrepreneur,’ a designation under Russian tax law that does not require a vendor to have a contract with a customer, or to obtain proof of their identity. All the vendor needs do is give the customer a receipt.

“When you buy bread from a shop, you don’t get asked for your passport and ID documents, do you,” Michurin shrugged.